Decision on Iceland aluminium plant postponed

(Sep. 12, 2001) The date for a final decision on a proposed aluminium plant in Iceland has been postponed from Feb. 1, 2002, to Sept. 1, 2002.

The parties to the Declaration on the Noral Project, which describes intentions to build an aluminium plant and related power systems in the East of Iceland, have decided to postpone their final decision on the project.

This decision was made because more time is required on environmental issues related to the power project and the financing of the aluminium company.

Intentions and commitments of the parties remain as outlined in the Declaration, apart from some timing adjustments due to the revised date for the final decision. The projects have progressed significantly and preparations so far have underpinned the feasibility of the projects.

Reydaral hf, the company that is to build and operate the aluminium plant, recently received approval for its Environmental Impact Assessment, with only minor comments from the National Planning Agency. All project work is well in progress.

Landsvirkjun, which is to build and operate the power system, is waiting for a final verdict by the minister for the environment on the environmental impact assessment of the Kárahnjúkar Power Project. As part of its appeal to the minister, Landsvirkjun has submitted substantial additional material.

The environmental impact assessment for the power project was not approved by the National Planning Agency and the appeal to the minister for the environment is in accordance with the environmental evaluation procedure in Iceland.

A formal decision to go ahead with the projects in the third quarter will only delay the planned start up of the aluminium plant in 2006 by a few months, as the additional time will give scope for more efficient sequencing of events during the construction period.

The project was formalized on May 24, 2000, in the form of a declaration between the Ministry of Industry and Commerce on behalf of the government of Iceland, Landsvirkjun (the national power company), Hydro Aluminium as, Reydaral hf. (a project company owned 50/50 by Haefi hf. and Hydro Aluminium as) and a special-purpose company owned by a group of Icelandic investors.